The changes, which prohibit the real estate practice of dual agency and mandate increased agent disclosure, were originally scheduled for March 15. They will now happen June 15, to allow for clarification of the rules and provide adequate time for realtor education and training. (Graeme Roy/CP)

New real estate rules delayed after concern from industry

New rules intended to improve consumer protection in real estate deals have been postponed for three months.

The changes, which prohibit the real estate practice of dual agency and mandate increased agent disclosure, were originally scheduled for March 15. They will now happen June 15, to allow for clarification of the rules and provide adequate time for realtor education and training.

The delay, announced Friday by B.C.’s superintendent of real estate, comes after considerable industry concern surrounding the implementation of the new rules.

In B.C. it is the Office of the Superintendent of Real Estate that sets the rules under the Real Estate Services Act, and it is the Real Estate Council of British Columbia (RECBC) that interprets and enforces the rules.

Last November, Micheal Noseworthy, B.C.’s superintendent of real estate, approved rule changes in line with a June 2016 report to the RECBC. The new rules aimed to eliminate conflict of interest and increase transparency by banning dual agency (the practice of representing both parties in a transaction), and forcing licensed agents to reveal in increased detail their representation and remuneration.

“The most complicated of these rule changes deals with the removal of dual agency – which has a considerable number of un-intended consequences – which impact consumer rights, and the practical application of real estate sales,” said Michael Ziegler, past president of the Canadian Real Estate Association and previous chair of the Real Estate Council of B.C.. “I think this is where the industry is out of step with government.”

Ziegler says that the industry supports consumer protection but it needs to be balanced with practical procedure.

When the RECBC posted its interpretation of the new rules on its website, realtors were shocked to see the dual agency ban didn’t just mean that they would have to release one client if a situation of dual agency arose. Instead, they had to give up both clients and completely step away from the sale. Licensees argued that the rule left consumers without representation and actually weakened consumer choice and protection.

A screenshot of the rule interpretation on Real Estate Council of British Columbia’s website

In a letter sent to Noseworthy dated Feb. 1, Jim Stewart, president of BC Real Estate Association, as well as nine presidents from real estate boards around the province expressed their concerns.

”We believe this interpretation could be damaging to real estate buyers and sellers with unintended consequences for consumer protection, thus undermining the intentions of the new rules…The response to date is usually one of confusion and incredulity,” the letter stated.

A delay was requested to give the Real Estate Council enough time to provide proper training in new management practices.

The superintendent responded on Friday (Feb. 9) with a letter back to Stewart and the board presidents, and an email to all licensees.

“My office is aware of the considerable industry concern surrounding the implementation of the new rules related to dual agency and enhanced consumer disclosures…It is clear that additional time would ensure a more successful roll out of the upcoming changes,” wrote Noseworthy, while announcing the implementation postponement.

Noseworthy also relayed that his office has been working with the Real Estate Council on how conflict of interest provisions should pertain to the dual agency prohibition.

“I agree that more clarity is required in this area. As such, I intend to publish rules for consultation that directly address how licensees should manage conflicts of interest involving competing clients so that they can continue to represent a party to the transaction. I believe this change will strengthen consumer protection,” he concluded.

Mykle Ludvigsen, manager of communications for the Office of the Superintendent of Real Estate, said it was never their intention for double recusal to be a part of the dual agency ban. Their intention was that a licensee would only have to step away from one side of the transaction.

The new rule will make B.C. the only province in Canada with a dual agency ban.

While the Real Estate Council website still reflects the original interpretation of the dual agency ban, updates are expected once the superintendent provides clarity.